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Houston company focused on reaping benefits of Lincoln Parish area gas

A Houston-based natural gas and oil company is focusing on building new wells and using horizontal drilling to develop what might be thousands of acres in Lincoln Parish for natural gas and natural gas liquids.

Memorial Resource Development Corp. has purchased or leased some 71,000 net acres in the Terryville Field in and around Lincoln Parish, where it is operating as many as eight rigs, with plans for perhaps 10 more by the end of the year. And they're still leasing land, mostly outside the parish seat of Ruston.

Cook said her office first saw an uptick in paperwork for land leases more than two years ago. It has increased steadily since, with a significant rise in the last six months.

MRD turns focus toward Lincoln Parish

That activity has paralleled MRD's interest in the Terryville Field in Lincoln Parish. Formed in 2011, MRD, with 500 employees, has shifted its interests from East Texas and the Rockies to a laser-like focus on Lincoln Parish, where it may spend as much as $500 million in capital expenditures this year. Such spending is counter to what is happening elsewhere in U.S. oil and gas this year, where companies have trimmed their exploration and production efforts because of lingering low prices.

Instead, MRD has announced that its first quarter results show an 87 percent increase in its average daily production from last year's first quarter to 277 MMcfe/d, or millions of cubic feet equivalent per day. Total revenues for the company were flat, year over year, because of lower commodity prices, the company said in revealing its first-quarter 2015 results.

MRD's activity is an anomaly in north Louisiana, where drilling has slowed since the Haynesville Shale enjoyed its heyday starting in 2008. But the Lower Cotton Valley, which extends into northern Louisiana, has been "well drilled" for decades, a spokesman for the state Department of Natural Resources said. Terryville has produced natural gas for some six decades, but advances in technology have improved well completion rates and enabled producers to reach new reserves.

North La. no newcomer to gas wells

Pat Courreges said interest has increased in and around Lincoln Parish, home of Louisiana Tech University, over the past two or three years. That area is marked by densely packed sand and is rich not only in natural gas but also oil and accompanying natural gas liquids, such as propane and butane, that are treasured by petrochemical companies.

Courreges said MRD's drilling was initially done by WildHorse Resources, and that returns were good. Since 2012, he said, 60 sites were drilled and another 60 or so permitted.

He said drilling is not as deep as in the Haynesville Shale, perhaps at 9,000 to 10,000 feet, with some horizontal drilling. He said WildHorse drilled "dozens" of wells in the area and that results were compared favorably to results in the Utica and Marcellus Shales in the Northeast.

"MRD is now a pure-play Terryville E&P company, which allows us to slowly focus on improving our operations, enhancing our efficiencies and optimizing our returns in Terryville Field," Bill Scarff, company president, said in a report from NGI Shale Daily.

NGI reported in March that MRD was operating six rigs in Terryville, one in East Texas at the end of 2014. By March, it had closed the Texas rig and added two additional rigs in Terryville.

MRD's first-quarter report showed more of the same is expected.

"We are very encouraged by MRD's recent well results, which came online at or above management's expectations," said John Weinzierl, MRD's CEO. "In addition, we continued MRD's successful track record of expanding our acreage position in and around the Terryville Field."

Land leases offered in adjoining parishes

West Monroe Mayor Dave Norris said land representatives had approached him about leasing his family's personal property west of West Monroe in Ouachita Parish. Offers, he said, were higher than those made by landmen in the past.

Landowner and timber company owner Randy Ewing of Jackson Parish said landmen have moved south through Lincoln Parish and into neighboring Jackson Parish, where they are entering into agreements. The former state senator said Lincoln Parish and its neighbors should expect to reap tax collection benefits connected to the increased business activity in the area.

Deals for three-year leases are said to run at $300 to $1,000 per acre, some observers say.

How deep the initial effect is on Lincoln Parish and surrounding areas is difficult to discern. Parish administrator Courtney Hall did not return repeated phone calls on Thursday and Friday. Tax officials said they were uncertain of the impact, and that people who would know the impact were not available Friday. The company reported that its first quarter production and ad valorem taxes were $2.8 million companywide, with most of that in Louisiana.

Lincoln Police Juror David Hammons said MRD continues to add rigs, but said the company has not hired many people locally. He said there are "three or four" rigs that have moved from location to location and that the local "rumor mill" suggests that they are meeting with success.

He also said that PennTex North Louisiana built one natural gas processing plant in the parish, with a second plant underway. Although PennTex is not connected to MRD, its plans were an apparent reaction to drilling success in Lincoln Parish.